(April 20, 2012) A California Chamber of Commerce-opposed “job killer” bill placing a targeted burden on companies with call centers failed to pass the Assembly Labor and Employment Committee on April 18.

AB 2217 (Pan; D-Sacramento) discourages businesses from even locating a call center in California by requiring the business to adhere to overreaching mandates.

In opposing the bill, the CalChamber and a coalition of associations pointed out that AB 2217 improperly seeks to penalize California companies that have moved their call centers out of state.

Moreover, AB 2217 also appears to exceed the boundaries of California’s jurisdiction by regulating activities in other states and even other countries, and is therefore likely unlawful.

The Orange County Register recently reported that 254 businesses left California in 2011, which was 26% more than in 2010. One main motivation for businesses to leave the state is costly laws and regulations that make it too hard to do business here.

Another Burden

Instead of alleviating some of those burdensome regulations, AB 2217 adds to the problem and seeks to penalize such companies for leaving California by expanding the California plant closure notification law (WARN Act) to apply to call centers that have 50 or more employees, instead of the general threshold of 75 or more employees that applies to other businesses.

AB 2217 also requires any customer service representative who calls or talks to a person who resides in California to identify the representative’s location, and if requested, transfer the phone call to a call center within the United States.

Interstate Impact

California’s attempt through AB 2217 to regulate activities in another state and even another country has a direct impact on interstate commerce and therefore is likely unconstitutional under the Commerce Clause.

Trade Implications

AB 2217 also likely violates international trade agreements. Both multilateral trade policies established by the World Trade Organization and bilateral, regional trade agreements such as the North American Free Trade Agreement, assure international obligations to prevent impediments to global trade.

AB 2217 represents a return to protectionism that will surely be seen as an affront to our trading partners. Therefore, the matter must be addressed at the federal level and Congress appears poised to do just that.

Despite its stated intent to address data breaches in foreign countries, AB 2217 does nothing to resolve this alleged problem. If data breaches truly are occurring in other states or countries, forcing a company to notify California of its relocation or to transfer a call back to a call center within the United States will not fix this issue.

The CalChamber and coalition are not aware of any data breaches that occur solely due to the location of the call center.

Key Vote

AB 2217 fell short of the votes needed to pass Assembly Labor and Employment:

Ayes: Allen (D-Santa Rosa).

Noes: Gorell (R-Camarillo), Morrell (R-Rancho Cucamonga), Swanson (D-Alameda).

Not voting: Alejo (D-Watsonville), B. Lowenthal (D-Long Beach), Yamada (D-Davis).

The bill was granted reconsideration.